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Proposed NI 25-101 Designated Rating Organizations, Related Policies and Consequential Amendments.
Letter Summary:
The CFA Institute Standards of Professional Conduct (the “Standards”) require CFA charterholders to exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations and taking investment actions, as well as having a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action.
Overview of the Council’s Comments:
The CAC supports regulatory oversight of the CRAs and agrees that the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies is a suitable framework for such oversight, but views this as only an initial step in the process of removing the reliance on RA’s opinions from the investment process, including removing references to credit ratings provided by the CRAs from all investment-related legislation and removing any exemptions from legal liability that would apply to the credit rating agencies’ research opinions.